Yes, EU is hurt a lot by being a currency union with freedom of movement without being a true federal state.

It is helpful to the core rich countries and to elite/upwards mobile across countries. But it hollows out the periphery.

A lot of the GFC era EU debt crisis was German banks lending to southern European states to then buy goods/services from.. German industry. So I was not as understanding of the northern countries looking down at the "lazy south". It was far more complicated than this and they were happy to look the other way while it worked for the first decade.

I'm honestly not sure where EU goes from here as the GFC & the response dampers any enthusiasm for a true federal government, unified military, etc. Not that there was much appetite to hand over that much sovereignty to start with. Nor does it help that post-GFC, even the rich parts of EU have further diverged in terms of wealth/income from the US, so they are probably feeling even less "generous".

Draghi wrote a whole report on EU competitiveness recently and in standard Eurocrat form its like a 500 page paper no one will read, let alone action.

Portugal's GDP PPP is about 485 billion dollars. About the same as Tennessee.

Portugal received about 3 billion dollars from EU funds in 2021. About the same Tennessee received from the US federal government in that same year.

I fail to see how a nominal difference in internal organization leads to much different outcomes.

edit: I got some bad data on my search, my bad, will leave my mistake up.

> This puts poor states like Portugal into a bad position

The only reason Portugal (and Ireland, Spain, Greece, etc) is counted as a "Developed Country" today is because of the EU.

These countries received the lion's share of EU Development Funds until EU expansion in the 1990s-2000s.

If Portugal didn't join the EU, it would have been similar to Argentina - it's economic peer until EU ascension in 1986

Indeed - people cannot live in money. Giving them more money will not help them get a place if there are not more places available to get. It would only drive up the price as the same people compete for the same housing with more money. Or, if they have some form of rent control - simply greater frustration all around.

Another possible consequence is greater inter-generational friction as young people with more money out-compete existing, older tenants/owners for those homes.

The Forbes article is from April, while The Local article you're quoting is from October. Back in April, the proposal was different, as The Local explains.

And the biggest problem for startup founders remains: you're taxed, on leaving the country, on unrealized gains. Being taxed on 5 millions of profit sounds fair, being taxed on 5 millions (or 30 millions) of valuation used for raising capital, in a startup that then fails and is worth nothing after a few years, maybe not so much. Neighboring countries do not have this kind of taxation.

Yeah, but I think the point is that this applicable on unrealized capital gains too. So if I start a company in Norway, raise a bunch of money and then move to the US because the company wants to have a presence there, I now have to pay the tax on the basis of the money raised; It's quite common for a reasonable successful founder to be worth millions on paper while having no cash.

Not at all. As soon as you get VC money, your valuation likely is in the millions, and then you're already way beyond the threshold. Good luck with the exit tax then.

Many sub-aspects of this are debatable, of course: Is VC money good? Are high startup valuations good? Also: Sure, you can defer the payment, you can pay it later with interest, etc., etc. But that's besides the point.

The problem here is: Once your startup reaches a high valuation, exiting the country, for whatever reason, will become difficult. And this might happen for rather innocuous reasons: Temporarily moving to the US to open up a subsidiary, staying there > 180 days / year? --> Exit tax. Etc. The number of second-order consequences is high, and I'd wager most of them are not good if your goal, as a country, is to foster a startup ecosystem.

The US exit tax isn't a fixed penalty for leaving, but rather a way to wring "pending taxes" out of citizens renouncing their citizenship. Per the exit tax you pay taxes as if all your assets had been sold, thereby forcing security gains to be "recognized" at that point.

I think the difference is that the US is where you'd want to found your startup anyway.

well. but these two countries are very different, so can't just copy paste policies.

Taxes make a government accountable to citizens. While not paying taxes because of oil wealth might seem enticing in the short term, it'll lead to disaster in the long term if a government becomes accountable mainly to the resource industry and neglects to invest in a diversified, productive economy.

Norway has high tax rates despite having oil wealth-- this ensures citizens remain productive and don't get too complacent by depending on a fluctuating commodity.

I've been to Portugal and it's lovely. But I don't think earning a low salary and not having enough is fun. Wouldn't be for me, at least.

> That's probably compounded by the amount of bureaucracy one needs to wade through to do anything

That does not sound like the description of a "fun" or "comfortable" country to live in. :-(

My friend created a tech company there because salaries are low. He employs a dozen capable smart professionals. He pays them well for the local economy and arbitrage of tech works means he’s able to offer low rates and high quality on the international market. He’s a rich expat gobbling up a housing unit but also creating jobs. It’s probably a net win for the locals.

A cool policy would be every newcomer has to construct (or cause to be constructed) at least one housing unit. If that was a condition of the golden visa everyone would do it and the benefits would be in injecting significant additional supply into the local rental and real estate market preventing supply and demand from raising housing costs.

> I think Portugal is fun, comfortable and safe.

Yeah, apart from the pickpockets in Lisboa. They are really the most brazen I have ever seen anywhere. They don't seem dangerous, but constantly having someone trying to pick a wallet from your bag is pretty annoying.

Right, but there are two variables in that equation. If the economy were stronger and more productive people could earn higher salaries. Don't get me wrong, I don't like taxes either (I live in Switzerland and pay relatively low rates of income tax) but it just seems like a loser move to decide that the solution is to fiddle with the taxes, rather than figure out how to make it a place people can build a great life in, including salaries, services, fun, comfort, safety ... all the different things that are important to people.

Romania total taxes are quite high, because we don't have tax ladders, it's one size fits all solution and it's a lot. It's that cost of living here is smaller and as result it's not that bad

Portugal is in a weird situation where it has high taxes and at the same time the median salary is too close to the minimum wage. This is difficult to overcome, and thus salaries are stagnated.

The government has no reason, in the medium to long term, to have such high taxes. Since, by keeping high taxation the state retrieves less money in absolute terms than they would if they let wages increase and steer away from the minimum wage.

I don't think you could say that about most EU countries. Portugal really is in a bad place.

(Edit: just clarifying that the situation is different, yes taxation is high as most others but in the case of Portugal its much worse)

What happens to the unhealthy Americans? What happens to the Americans who are too poor they cannot pay health insurance and the cost of medicine/surgery. I think only the wealthiest Americans have much more money in their bank accounts than they would in Europe.

Just looking at salaries and taxes makes for a very distorted view of wealth and affordable lifestyle in the US vs elsewhere. Even if you take into account ALL the major variables such as college costs/loans, housing prices, real estate taxes, cost of healthcare, retirement, etc, it is very difficult to compare.

You can better see the reality by looking at actual examples of families with massively different incomes living in the US vs elsewhere. It takes WAY higher salary (5x?) in the US to enjoy the same lifestyle as someone in the UK, for example.

I should look more into cost of living in Portugal, maybe, but one of the other commenters mentioned housing prices being… high. In US, making ~$20,000 you’d be considered poor (maybe not “officially”) and probably pay zero federal tax and receive quite a bit of assistance.

That extra money comes in handy when you're paying $15K/year for health insurance because if you don't a few hours in the hospital would cost you triple that.

This is correct.

Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe

Yes, there is a public health system, but people tend to avoid it when they can. Most opt to go private for their dental, for example. And if they have any kind of systematic (sibo, ibs, autoimmune, etc) problem the public system is useless and they will have to travel to find a private specialist. On the other hand, the private system is really good here, and also pretty cheap.

It is realistically much more than 14 euros. In Eastern Europe I pay almost 700 Euro per month in mandatory state health tax (it is not an insurance, it is a tax because it is a percentage of income, not related to what you are covered for).

I'm paying about 50% tax rate here in NL (we have a very high income), I just wish that those who have 10x and more than our income also had to pay a 50% tax rate. Only our tax rules have been written so that those who are very rich don't pay their fair share.

Portugal taxes are probably higher than Sweden.

Many people ignore portugal mandatory social contribution, it is mandatory even if you earn minimum wage, and the tax there is about 34% (forgot exact number, the way they charge make it clunky to calculate). Most portuguese people think this tax is "only" 11% because the rest of the tax is "paid" by the employer. Average people don't understand that if your salary was supposed to be 1000 and you get only 650 after tax you paid 350 in taxes even if your paycheck says your pretax salary is 800.

Note: the income tax is paid on top of the social contribution, so is easy to end paying 50%+ taxes if you are in tech. Then Portugal gets mad with all recent grads moving to Germany. (By the way, I still live in Portugal but all companies I worked for since moving here were German, Portuguese companies can't compete in wages)

It can go up to 48%. But as in most countries, it's progressive: you pay X% over the first A€, then Y% over the next B€, etc.

Then you have Social Security (mandatory): 11% on the employee and 23,75% on the employer, or 21,4% for independent workers.

Cries in throat sounds and having tax discount expiring at the end of this month

Not even close, the marginal federal tax rate is 12% for income between $11k and $44k [0]. This doesn't take into account state/property taxes, but it's nowhere near

[0]https://www.irs.gov/filing/federal-income-tax-rates-and-brac...

At the levels OP described I’d be at 17% federal and state taxes rate. I’m at about 42% with state and federal but you need to add and zero and double the amounts to get close to our household income.

Not sure if Portugal uses marginal tax rates or not.

Different analogies, but both are true.

Young, educated, [and motivated] workers are a desired and contested resource.

Producing them is also important.

You could have more currencies than states. That is how it used to work in the US.

>The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means.

People late in their careers are buying imports, people early in their careers are leaving the country. That's as clear of a case of the integral going negative as I can imagine.

Greece should have never joined the Eurozone, and are basically a middle income country despite their high GDP per capita (median household incomes are comparable to Mexico and Malaysia).

That said, leaving the Euro would be too economically traumatic for Greece at this point.

If the US is trading with the EU, say, and the US is importing too much and exporting too little, eventually that affects the exchange rate between the dollar and the euro. That adjusts in a way that somewhat counteracts the trade imbalance.

But if Portugal imports too much from France and exports too little, and they're both using the euro, then there is no exchange rate to adjust, and so you're just left with the trade imbalance and no adjustment.

More than a million greeks have emigrated since the debt crisis. Life is enjoyable for tourists

How much of that is still at high rates? Ireland’s (at one point the second-highest debt to gdp ratio in the eurozone) average cost of debt servicing is ~1.5%; at that rate you don’t _want_ to pay it off. At least in Ireland it was largely refinanced since the crisis; I’d guess it’s similar in the other high-debt nations (except possibly Greece, where refinancing might be difficult).